The term net lease refers to a contractual agreement where a lessee pays a portion or all of the taxes, insurance fees, and maintenance costs for a property in addition to rent. Net leases are commonly used in commercial real estate.
In the purest form of a net lease, the tenant is expected to pay for all the costs related to a piece of property as if the tenant were the actual owner. A net lease is the opposite of a gross lease, where the tenant pays a flat rental fee while the landlord is responsible for the other costs.
The management of an enterprise has a duty to prepare the result of their operation for each defined period in accordance with the financial reporting standards for the external auditors appointed by the directors to independently verify correctness of the figures with the underlying records.
It must be noted here that in practice, while the management prepare the financial report, the directors are to lay the report before the shareholders in the annual general meeting.